HOPEFUL DESPITE OUTFLOWS
The debut of Ethereum exchange-traded funds (ETFs) has been met with mixed results, as negative net flows were observed in the first week. These outflows were primarily due to investors withdrawing funds from the Grayscale Ethereum Trust (ETHE), overshadowing interest in the newly introduced spot ETH ETFs. The price action reflected this lackluster ETF activity, with Ether slipping by 5% last week. Nevertheless, despite this, it is important to remark that other Ether ETF products from major players like BlackRock, Bitwise, and Fidelity managed to attract substantial inflows totaling $1.15 billion. Analysts are closely monitoring the outflows from the ETHE, with expectations that the pace may taper off in the coming weeks. It is anticipated that once the outflows subside, there may be a positive trajectory for Ether ETFs, offering potential growth opportunities in the near future.
POSITIVE RESULTS
During the ongoing earnings season, several companies within the S&P 500, including Deckers Outdoor, Lockheed Martin, and 3M, have reported solid financial performances, driving positive momentum in the market. Deckers Outdoor, known for its outdoor sports and lifestyle footwear, exceeded expectations with an 87% growth in earnings and raised its fiscal outlook. Lockheed Martin, a leading defense contractor, saw a 6% increase in earnings and strong cash flow generation, showcasing resilience and consistent growth. Similarly, 3M, a diversified technology company, reported a significant 40% year-over-year rise in earnings and revised its guidance upwards. These impressive results, along with ongoing shareholder-friendly initiatives such as dividend increases and buybacks, indicate a promising outlook for these companies and contribute to the overall optimism surrounding the S&P 500 index during this earnings period.
BNPL TO BE BANNED
JPMorgan Chase Bank has announced a change prohibiting its credit cards from being used to pay off Buy Now Pay Later (BNPL) loans through third-party platforms like Klarna and Afterpay, effective October 10, 2024. This move aims to prevent further debt accumulation among consumers using BNPL services. While appearing customer-focused, experts believe Chase stands to gain financially from directing customers toward its own BNPL service, Chase Pay Over Time. The decision mirrors Capital One’s ban on using credit cards for BNPL payments in 2020. This industry trend prioritizes banks’ financial products over third-party services and enhances customer data control. Consumers facing this change are advised to explore alternatives such as adjusting budgets, communicating with BNPL providers for payment flexibility, and seeking hardship policies for temporary relief. Chase’s decision underscores a strategic shift within the banking industry, with other banks likely to follow suit to maximize revenue and competitive advantage in the BNPL market.
SHARP DECLINE
The global commodities market is experiencing a widespread decline in value this year, attributed to various factors including a challenging economic landscape in China, a selloff in U.S. natural gas, and losses in food prices. The Bloomberg Commodity Spot Index, which tracks a diverse range of energy products, metals, and crops, has plummeted by almost 6% in July, signaling the worst monthly performance since May 2023. This downward trend has raised concerns among speculators, particularly as demand from China remains uncertain and oversupply issues persist in certain sectors. Moreover, while the drop in prices may offer some relief to central bankers battling deflationary pressures, it poses significant challenges for producers like members of the OPEC+, whose revenues are impacted by reduced prices. Noteworthy commodities like copper, Brent crude, and U.S. natural gas have all experienced significant declines, with broader impacts seen across iron ore and agricultural markets. Nonetheless, despite this general decline, gold prices have shown resilience, indicating potential benefits from anticipated Federal Reserve interest rate cuts.
INTERNATIONAL NEWS
In July, German inflation accelerated to 2.6% from the previous month’s 2.5%, sparking concerns and potentially impacting the European Central Bank’s decision-making on interest rates. This rise was driven by increases in consumer prices, particularly in food, as energy costs stabilized. It is worth noting that the eurozone as a whole is facing stable inflation levels, with upcoming reports from France, Italy, and the region expected to confirm this trend. However, Germany’s economic performance has shown signs of weakness, with unexpected contractions in key sectors, such as manufacturing. The ECB is closely monitoring the situation, particularly focusing on domestic price pressures and wage growth to assess the need for further monetary policy measures. Nevertheless, despite Germany’s higher inflation, analysts are still optimistic about the potential of additional rate cuts in the coming months, though the central bank has not provided clear guidance yet.
